House of Fraser scheme of arrangement meetings scheduled for July 19

By Caroline Salls

Pittsburgh, July 5 – House of Fraser and House of Fraser (Stores) Ltd.’s (HoF Stores) requests to schedule meetings of noteholders and senior facilities lenders to allow the creditors to vote on the companies’ scheme of arrangement proposal were approved by English and Scottish courts, according to a news release.

The scheme creditor meetings will be held on July 19 in London.

House of Fraser said the scheme proposals follow a May 2 announcement that C.banner International Holding Ltd. conditionally agreed to acquire a 51% stake in House of Fraser Group Ltd. The company said the transaction is expected to result in a roughly £70 million capital injection into the U.K. House of Fraser group.

The company said the purpose of the schemes is to extend all applicable maturity dates under the notes and facilities agreements to Oct. 30, 2020, amend change-of-control provisions so the lenders and noteholders will not be entitled to be repaid or have their notes redeemed as a consequence of the transaction, provided that the transaction is completed by Aug. 20, and allows up to £50 million of new debt to be incurred.

In addition, the schemes will reduce the length of time, to 10 business days from 60 days, during which a default under the notes indenture related to the requirement to deliver the annual report for the fiscal year ended Jan. 27 may be cured from the scheme effective date through Aug. 20.

If the schemes are implemented, all scheme creditors will be entitled to receive an extension fee, which will be 1% of the principal amount of debt outstanding on July 18.

According to the release, the scheme proposals are central to the ongoing significant restructuring of the business, which will facilitate a recapitalization of the House of Fraser group through the transaction and will allow its management team to continue to implement their transformational strategy.

If the schemes are not implemented, House of Fraser said it is likely that there would be a payment default under the facilities agreement, as the group would likely be unable to repay the roughly £26 million due on July 30, and it is likely that the group would enter into insolvent administration or liquidation.

House of Fraser is a London-based department store company.

© 2015 Prospect News.
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